Wal-Mart Stores Inc. broke with major European retailers on Tuesday by announcing its own plan for improving safety at Bangladesh garment factories. The plan is billed as a commitment, but is different from the legally-binding pact meant to prevent disasters like the building collapse that killed more than 1,100 garment workers last month.

Under its plan, Wal-Mart said it would hire an outside auditor to inspect 279 Bangladesh factories and publish results on its website by June 1. When fire and building safety issues are found, Wal-Mart said it will require factory owners to make necessary renovations or risk being removed from its list of authorized factories.

In declining to go along with the other retailers, Wal-Mart—like Gap Inc. earlier this week—cited that accord's legally binding provisions.

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On Tuesday, the five-year Accord on Fire and Building Safety in Bangladesh, negotiated with worker-safety groups and labor unions and some major European retail chains, drew support from at least six more retailers, including Canada's Loblaw Cos., whose Joe Fresh clothing was found in the building's rubble.

Wal-Mart will pay for factory audits, which will be conducted by Bureau Veritas, a European inspection company. The retailer won't pay for renovations but will "expect the cost of safety improvements to be reflected in the cost of goods we buy," said Rajan Kamalanathan, Wal-Mart's head of ethical sourcing, in an interview.

Nearly three weeks after a factory collapse killed more than 1,100 people, the world's biggest clothing companies are committing to safety standards that could play a key role in policing the country's main industry. Andria Cheng reports.

Americans' appetite for cheap clothes led to a manufacturing boom in Bangladesh, and the race to add capacity set the stage for the series of horrific accidents. Ann Zimmerman reports. Photo: AP.

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Meanwhile, J.C. Penney Co., Sears Holdings Corp. and a number of other North American brands have been drafting their own safety plan. Details of that plan are still evolving, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, a U.S. trade group.

The proliferation of competing proposals may undermine their effectiveness, some experts said, and voluntary efforts have a poor track record. "Without the legally binding contract that the European retailers have signed, it's just putting lipstick on a pig," said Bob Ross, a critic of sweatshops who teaches sociology at Clark University in Worcester, Mass.

Some U.S. retailers are uncomfortable with the accord because they could be liable in U.S. courts if they fail to adhere to the provisions, according to one person familiar with the matter.

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Army personnel Tuesday at the site of collapsed Rana Plaza building on the outskirts of Dhaka, Bangladesh.
Xinhua/Zuma Press

Gap had cited that legal liability issue as the reason it hasn't signed the accord. It has proposed an amendment to the pact that would replace the legally binding language with a provision that retailers that failed to live up to the standards be publicly expelled from the program.

"We are six sentences away from signing the accord that's been proposed and remain cautiously optimistic that we will move down that path," a Gap spokesman said.

Sears said it would continue "participating in discussions on the Accord as updates are made and more information is available, but is not prepared to sign the current proposal."

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The retail giant said it will make public a list of more than 250 factories whose authorization to produce goods for Wal-Mart has already been revoked.
Agence France-Presse/Getty Images

The sponsors of the safety pact said they had met their goal of signing up enough retailers to cover 1,000 of the roughly 5,000 garment factories in Bangladesh and still expect more to sign on. Among the new signers on Tuesday were Italy's Benetton Group SpA, Spain's Mango MNG Holding SL and El Corte Ingles, France's Carrefour SA, and Marks & Spencer in the U.K. PVH Corp., the parent of Calvin Klein, Hennes & Mauritz AB and Inditex, parent of the Zara fast-fashion chain, had announced on Monday they were signing the accord.

Wal-Mart is among the biggest customers of Bangladeshi garment factories, which has grown into a $20 billion a year business.

Wal-Mart said its safety plan meets or exceeds the proposal and "will get results more quickly," a spokesman said. The other plan endorsed by the European retailers "introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals," he said.

Under the accord, a governing board will include three labor representatives, three retailer representatives and a chairman chosen by the U.N. International Labor Organization. The board will oversee safety inspections of up to 5,000 factories over two years, with the results to be made public.

The board also will oversee dispute resolution between retailers and union representatives, which will be subject to arbitration with decisions enforceable in a court of law in the country of the retailer. To implement the accord, each company's cost will be based on how much they produce in Bangladesh. Participation will cost each company a maximum of $2.5 million over the five-year period, according to a draft of the agreement.

Wal-Mart on Tuesday made public a list of more than 250 factories whose authorization to produce goods for Wal-Mart has already been revoked, though it isn't saying why they are no longer approved.

"Audits aren't cheap and we pay for them ourselves," said Mr. Kamalanathan, in an interview. "By sharing fire safety and building inspections between the brands, retailers won't have to duplicate efforts."

He said Wal-Mart wants to encourage retailers to work together by publishing audit results, so other clothing buyers are aware of Wal-Mart's concerns.

Wal-Mart will also set up an independent call center for garment workers to report unsafe conditions and conduct fire safety training for every worker in the Bangladesh factories that make clothes for the U.S. retailing giant.

James A. Gross, professor of labor relations at Cornell University said using an outside auditor "frees the company of any independent supervision or assessment of what they are doing," he said.

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